leveraging the front end

7/30/2019 Leveraging the Front End

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Optimizing

Maximizing Shopper InteractionIn A New Era Of Technology

Front End CheckoutMerchandising

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Front-End Focus Leadership Sponsors

The Front-End Focus Leadership sponsors are committed to

providing continued front-end merchandising insights andintegrated solutions to improve store performance &

enhance customer satisfaction

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The Front-End Situation

A location most every shopper passes

The Front-End checkout is a critical location in the store

Major location for immediate consumption

snacks and other impulse items

It represents a significant source of impulse sales

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Emerging Front End Checkout Trends

Increased retailer focus on checkout trips, basket size and sales performance

Retailers increasingly want to reduce design and style complexity

Lower profile fixtures streamlined look category segmentation

Average program life 4.5 years

Additional and larger beverage coolers

Self-checkout transactions continue to grow more stores & lanes/store

Growing desire by some retailers to add space for promotions

Emerging categories & speed to market of new items

Role of the Power Categories

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Sales of Front-End Items

Annual Supermarket

Front-end items generate $5.5 Billion for Supermarkets

Improving Front-End Checkout Merchandising could yield an additional $1.7 Billion in sales

The Front-End Represents About 1.0% of

Grocery Store Sales and 1.3% of Profits

* Source: Front-End Focus, Progressive Grocer 2008

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Grocery Front-End Checkstand

Store Sales Store Profits

1.0%

1.3%

$7.2 Billion

$5.5

Billion

$1.7Billion

$ Opportunity ForImprovement Of

Front-EndMerchandising

Annual SupermarketSales* =

$547 Billion x1.0% of Sales =

$5.5

Billion


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Incremental Sales Driven By Impulse Buying Are Key

Percent of Decisions Made In-Store

Magazines and Consumables drive incremental sales and thosepurchase decisions are generally made in store

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* Source: Front-End Focus


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Beverages, Magazines, & Confectionery Generate Over80% of Checkout Sales & Are Purchased Frequently

Percent of Total Checkout Dollar Sales

And they are the power categories across all lane types

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* Source: TWR Checkout Research, 2011 (eight retailers and over 1,400 stores), 52 weeks through 2010 to 2011, Impulse Marketing

Percent of Consumers Buying At

Checkout Once a Month or More(% of Purchasers of Category)

84%


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Front-End Power Categories

$ Share of

Front-End Sales

Impulsiveness

of Purchase

Front-End Power Categories Are

Defined By Key Metrics

Frequency of

Purchase

Household

Penetration

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* Source: Front-End Focus, DHC Analysis

High performing retailers consider four essential shopper demand criteria when allocating space


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Best Practice: Manage The Front-End Based

On Consumer Buying Behavior

Focus on key

categories that:

Have high Household

Penetration

Have high Purchase

Frequency

Provide Higher

Impulse Sales

Generate higher

Front- End Sales

Health Items

Razors/Blades

Baked Goods

Lip Care

Oral CareHousehold Products

Audio/Video/DVD

Other Snacks

Beauty Care

Grocery Products

Film/Camera Supplies

Childrens Items

Nutrition/Energy Bars

Books

Maps/Horoscopes/Puzzles

Low Scores

Salty Snacks

Batteries/Flashlights

Cookies/Crackers

Nuts/Seeds

Meat SnacksGift/Phone Cards

Tobacco Accessories

Mixed Scores

Confectionery

Beverages

Magazines

High Scores

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Magazines And Confectionery Should Be On ALL Lanes

Consumers tend NOT to shop across checkout lanes so retailers must have

key consumer front-end categories available on every lane

I dont select a

checkout lane based

on the items

displayed there.

67%

60%I rarely take items

from one checkout

and wait in line at

another.

60%

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* Source: Front-End Focus, Envirosell


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Visual Attention is Focused on the Power Categories

Resulting in Incremental Sales

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* Source: TWR, Indiana University


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Self-Checkout

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Penetration Of Self-Checkout Usage Has Reached A

Critical Level, Similar To ATMs

Self-Service Devices used in Last 6 Months

5%

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* Source: Self-Service Consumer Study


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Cashier Lanes

$34.50

$31.71

Basket Without

Checkout Item

Basket With Checkout

Item

Checkout Purchases Make A Big Difference In Profitability

+8.8%

Especially at self-checkout where there is a 13% increase in basket size

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* Source: Front-End Focus, TWR Checkout Research, 2011

Self-Checkout Lanes

$23.40$20.61

Basket Without

Checkout Items

Basket With

Checkout Items

+13.5%


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Front-End Merchandising Can Dramatically Effect The

Value Of The Lane, Especially At Self-Checkout

Lack of merchandising at self-checkout dramatically hurts sales

Merchandising of self-checkout is generally an afterthought

Without merchandising self-checkout, the potential lost sales is almost $100,000 per store

Annual Value of a Checkout Lane= $24,000

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Average AnnualFront-End Dollars

$8,772

$25,900$23,671

Regular Express Self-Checkout


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Audits Suggest That 50% Of Self-CheckoutsAre Not Merchandised

Self-Checkout Merchandising Conditions % of Stores Where Self-Checkout Has

Good

Merchandising

11%

Average/Less Than

Average

Merchandising

39%

No

Merchandising

50%

Lack of merchandising has a pronounced effect on impulse sales

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* Source: Industry Audit


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Self-Checkout Lane Today Vary Dramatically

in Layout & Merchandising

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Self-Checkout Merchandising Today Tends to Fall into One of Three Broad Categories

IncongruentSCO areas with items or categoriesthat have little shopper relevance,

but appear to generate somerevenue and/or liquidate inventory

Tacked-OnQuick-fix solutions that simplyposition merchandising next toa SCO

Cluttered

Disorganized, bazaar-likeenvironments that are congestedwith fixtures, creating queuingconfusion and hindering SCOcheckout access

PoorMerchandising

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IncompleteSolutions that lack key categoriesshoppers seek and buy everyday

from regular checkout lanes

InconsistentSCO environments withmerchandised categories that varygreatly by SCO lane

DisconnectedSolutions that were designed with

little regard to shopper needs andbehavior/ checkout process

UninspiredFunctional, transactional solutionsthat still have opportunity to betterinspire impulse purchases

Good, Not GreatMerchandising

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EmptySCO environments thatsacrifice profitable front end

sales for operating efficiency

ZeroMerchandising

1

50% of SCOshave NO

Merchandising


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Maximize Sales at Self-Checkout Lanes

With More Complete Merchandising

Front-End sales at Self-Checkouts improve significantly with more complete merchandising

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* Source: FEF Study, DHC Analysis.

Self-Checkout Sales Per $ MM ACV Index

by Level of Merchandising

10997

78

Low

Merchandising(400 Inches)


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Beverages, Magazines, & Confectionery AreThe Sales Drivers Of The Self-Checkout Lanes

Strategy: Focus on these key categories on self-checkout to drive incremental sales

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% of Front-End Dollar Sales in Self-Checkout Lanes


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There Are Many Incomplete Approaches To

Merchandising The Self-Checkout Lanes

But none of them are integrated until now

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Innovative solutions that leverageboth new technology and

checkstand best practices...

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Front End Solutions Collaborative Team

Best Practice Fixture Designs

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k h d d


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An integrated solution of technology and merchandising that is installed simultaneously

Sponsors of the Front-End Solution Center are looking to test front-endmerchandising concepts with retailers that want to improve their check-out sales.

Working Together To Provide Integrated

Merchandising Solutions For Self-Checkout Lanes

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Optimizing

Maximizing Shopper InteractionIn A New Era Of Technology

Front End CheckoutMerchandising

leveraging the front end

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